Expectations for US interest rates have shifted sharply in recent days. Before Friday, 28 August, markets saw little chance of a rate hike in September. That changed after Fed Chair Kevin Warsh struck a firmer tone on inflation at Jackson Hole, reaffirming the Fed’s 2% inflation target and emphasising interest rates as the Fed’s primary policy tool.
As of 3 September, markets are pricing in a 62% probability of a 25-basis-point rate hike on 16 September. This makes Friday’s US employment report particularly important, as the figures could strengthen or challenge current rate expectations.
NFP & Unemployment Rate
Friday, 4th September at 15:30 GMT+3
Consensus Expectations
Market pricing:
- Nonfarm payrolls: +58,000 (previous: -23,000)
- Unemployment Rate: 4.1% (previous: 4.1%)
Previous NFP Market Reaction
What surprised markets last time?
- The unemployment rate unexpectedly fell to 4.1% from 4.2%.
- Nonfarm payrolls declined by 23,000, compared with expectations for an 80,000 increase, marking the first contraction since February 2026.
- The weak payroll figure raised concerns about labour-market conditions and reduced expectations for an immediate Fed rate hike.
Price movement during the first 15 minutes after the previous release (high/low prices):
Potential Market Scenarios
Bullish USD / Bearish US Equity Indices
- Stronger payroll growth combined with a stable or lower unemployment rate could reinforce expectations for a September Fed rate hike.
Bearish USD / Bullish US Equity Indices
- Weak payroll growth or a higher unemployment rate could reduce expectations for monetary tightening at the September meeting.
Mixed Outcome
- Conflicting signals — such as stronger payroll growth alongside a higher unemployment rate — could leave the Fed outlook uncertain. Markets may react sharply to individual components of the report, potentially increasing short-term volatility across the US dollar and equity indices.
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